Keysight Records Impressive Fourth Quarter 2018 Financial Results

Keysight Technologies has released its fourth fiscal quarter financial results of 2018 ending Oct. 31. The company delivered a very strong finish to a breakout year with both revenue and earnings exceeding the high-end guidance for the quarter. Revenue grew 19 percent on a GAAP basis and 16 percent on a non-GAAP basis to reach a record $1.05 billion as we continue to see broad-based momentum across multiple end markets with our solutions.

Fiscal 2018 was a record year for Keysight. The investments made by the company over the past several years in technology, solutions, software and services are delivering results and have enabled Keysight to be at the forefront and capture the demand seen in the market.

Reporting Segments

  • The Communications Solutions Group (CSG) reported record revenue of $566 million in the fourth quarter, up 23 percent, driven by 5G-related R&D spending across the wireless ecosystem, data center next-generation 400GbE, high-speed digital test and aerospace, defense and government.
  • The EISG (Electronic Industrial Solutions Group) revenue grew a record 21 percent in the fourth quarter to $249 million, driven by solid double-digit growth for automotive and energy, general electronics and semiconductor measurement solutions.
  • Ixia Solutions Group (ISG) revenue was $115 million in the fourth quarter, compared with $124 million in the prior year fourth quarter. ISG continued to improve sales execution; however, revenue was adversely impacted by the contract manufacturing transition.
  • Services Solutions Group (SSG)revenue grew 10 percent in the fourth quarter to a record $121 million, driven by growth in calibration, remarketed and repair services and solutions.

Fourth Quarter Financial Summary

  • GAAP revenue grew 19 percent to reach $1,047 million, when compared with $878 million last year. Non-GAAP revenue, which excludes the impact of fair value adjustments to acquisition-related deferred revenue balances, grew 16 percent to reach $1,051 million. Non-GAAP core revenue, which also excludes the impact of foreign currency changes and revenue associated with businesses acquired or divested within the last twelve months, increased 17 percent.
  • GAAP net loss was $114 million, or $0.61 per share, compared with a GAAP net loss of $38 million, or $0.20 per share, in the fourth quarter of 2017. Fourth quarter 2018 GAAP net loss reflects a non-cash goodwill impairment charge partially offset by a benefit from tax planning initiatives within the quarter.
  • Non-GAAP net income was $193 million, or $1.01 per share using 191 million weighted average shares, compared with $135 million, or $0.71 per share using 189 million weighted average shares in the fourth quarter of 2017.
  • As of October 31, 2018, cash and cash equivalents totaled $913 million.

Fiscal Year 2018 Financial Summary

  • GAAP revenue grew 22 percent over last year and totaled $3.9 billion. Non-GAAP revenue grew 20 percent to reach $3.9 billion. Non-GAAP core revenue grew 13 percent year-over-year.
  • GAAP net income was $165 million, or $0.86 per share, compared with $102 million, or $0.56 per share in fiscal 2017. Non-GAAP net income was $618 million, or $3.24 per share, compared with $462 million, or $2.53 per share in fiscal 2017.
  • Under the $350 million share repurchase authorization implemented in March 2018, Keysight acquired approximately 2 million shares in the open market at an average share price of $57.91, for a total consideration of $120 million during fiscal year 2018. Keysight has $230 million remaining under the current share repurchase authorization.

Keysight’s first fiscal quarter of 2019 GAAP revenue is expected to be in the range of $962 million to $982 million and non-GAAP revenue for the first fiscal quarter of 2019 is expected to be in the range of $965 million to $985 million. Non-GAAP earnings per share for the first fiscal quarter of 2019 are expected to be in the range of $0.76 to $0.82, which exclude items that pertain to future events and are not currently estimable with a reasonable degree of accuracy. Therefore, no reconciliation to GAAP amounts has been provided.